May 18 (Bloomberg) -- Danielle Chiesi, the 47-year-old
securities analyst who pleaded guilty to securities fraud in the
biggest U.S. insider-trading crackdown, is back in town.

Chiesi, who did a 15-month stint at a West Virginia prison
camp for passing illegal stock tips to hedge-fund manager Raj
Rajaratnam, returned in January to New York City and has been
living at a federal halfway house in the north Bronx.

“It’s good to be back,” a svelte Chiesi, wearing a white
sleeveless peplum top, jeans and pink and white scarf, said
May 16 as she left a residence she shares with other newly freed
prisoners. “I feel good. I feel great.”

Chiesi, giving her first post-prison interview, is one of
more than 70 stock traders, analysts, lawyers and executives who
have been convicted of insider trading since August 2009. The
former teenage beauty queen, who once showed up at technology
conferences wearing form-fitting clothes and low-cut tops, is
among the most flamboyant defendants to be ensnared in the
sweeping federal crackdown.

The probe initially centered on Rajaratnam, the Galleon
Group LLC co-founder who was convicted in 2011 of conspiracy
after an eight-week trial. The Sri Lankan-born money manager,
who allegedly earned at least $45 million on tips from corporate
insiders, is serving an 11-year prison sentence.

‘Bold Move’

At Rajaratnam’s trial, prosecutors played wiretapped
recordings of his conversations with Chiesi, who worked as an
analyst at New Castle Funds LLC in New York. In one, they
speculated why another trader bought 1 million shares of
Advanced Micro Devices Inc. before the public disclosure of a
transaction between Sunnyvale, California-based AMD and Abu
Dhabi’s Mubadala Development Co. Prosecutors said they had a
tip.

“That’s a very bold move to make,” Chiesi said on the
recording. “Do you think somebody knows what we know?”

Chiesi pleaded guilty to conspiracy before the trial and
went to prison in October 2011. In her guilty plea, she admitted
that she solicited inside tips from technology industry
executives. Among them was Robert Moffat, a former International
Business Machines Corp. executive with whom she had an intimate
relationship, he said in his guilty plea. Moffat got a six-month
sentence.

“I was complicit,” Chiesi said in the May 16 interview.

West Virginia

Chiesi did her time in Alderson, West Virginia, at a
minimum-security camp in the foothills of the Allegheny
Mountains. Martha Stewart was once jailed there for lying to
authorities about her sale of stocks.

Chiesi’s home was an 8-foot by 10-foot cubicle. Her
cellmate was doing time for a drug offense, as were many at the
prison. She spoke to family on brief phone calls and tutored
other inmates in math. She went running and tried to exercise in
a sparse gym that lacked weights.

Chiesi said she earned respect from fellow inmates because
she hadn’t cooperated with prosecutors.

“Not being a rat works,” she said.

“I didn’t talk, I didn’t speak, I kept to myself,” Chiesi
said of a term she described as “very difficult.” Her cellmate
was “an inspiration” who “really helped me get through.”

Good Behavior

Chiesi left Alderson in early January after shaving time
off her sentence for good behavior and participation in a drug
and alcohol program. She headed for the community-based “re-entry” program in the Bronx, where she’ll spend six months
before returning to an apartment in Manhattan.

“When my family picked me up, you cannot even believe the
feeling,” Chiesi said. “I had my mom, my brother, my sister,
my nieces. They drove outside of the Alderson gates, and I
jumped out of the car. It was surreal.”

“All I could say was, ‘I did it,’” she said.

Now Chiesi is living on a tree-lined Bronx street that’s a
far cry from the tony midtown Manhattan neighborhood that was
once home. She has a room in a five-story facility housing men
and women which is staffed by security officers guarding the
entrance. Nearby are shuttered storefronts and a jeans shop
selling $6 tank tops.

Chiesi, who is working for her brother in a job she
declined to identify, comes and goes without an escort.

“Life is hard,” she said. “I didn’t come back to
something that’s perfect.”

‘Toxic’ Relationship

At her sentencing, Chiesi’s lawyers argued that her former
boss, Mark Kurland, co-founder of New Castle Funds, had used
their “toxic” sexual relationship to manipulate her into
feeding him tips. In the May 16 interview, Chiesi asked about
Kurland, who was sentenced to 27 months in the case.

“I want to know what Mark Kurland is doing now,” she
said.

Chiesi’s lawyer, Don Buchwald, said in an interview on May
16 that Chiesi must serve an additional two years on supervised
release, a form of probation, after she leaves the halfway
house.

Chiesi says she’s resilient and is eager to move on with
her life.

“I don’t have a career anymore, but I have drive and
ambition, and I will make it work,” she said. “I’m back.”

The case is U.S. v. Rajaratnam, 09-cr-1184, U.S. District
Court, Southern District of New York (Manhattan).